Can a CDFI Help Fund Your Business Growth?

Community Development Financial Institutions are organizations that provide financial resources to small businesses. They are similar to banks, but their focus and lending requirements differ somewhat. CDFIs are willing to lend money to companies in early growth stages and frequently provide services to help small businesses become creditworthy.

Who should work with a CDFI?

Any small business owner who has been in business for more than 2 years, has steady revenue growth, and is paying more than 10% interest on loans or credit cards.

Are CDFIs hard to get funding from?

Many of the individuals who work within CDFIs are former bankers who left the banking industry because they felt that traditional banking had too much red tape and was not doing enough to supWhport small businesses. They have many of the same lending requirements as banks, but are more willing to work with small business owners to help them become creditworthy.

What does it mean to be creditworthy?

Creditworthiness refers to the likelihood that your business will be able to repay loans. Whether you are seeking funding from a bank, CDFI, or angel investor, the person lending you money wants to have a clear understanding of your business model, financial reporting, infrastructure, and growth plans.

What are ways to improve creditworthiness?

Here are the top 5 things you can do this month to improve your creditworthiness

1. Educate yourself on what a balance sheet, income statement, and cash flow statement are, and work to establish these reports for your business.

2. Outline your business model using the Business Model Canvas.

3. Define your capital needs, and create projections on how the capital will drive revenue growth or reduce operating expenses.

4. Review your financial reporting and identify ways to improve your profit margin.

Identify how your business generates revenue, and seek ways to diversify or expand your income stream.

Why Start With CDFIs to Fund Your Business Growth

During a recent Association for Economic Opportunity conference, Carrie Cook from the Richmond Federal Reserve shared that CDFIs are increasing the amount of loans they are giving to small businesses, while large banks are decreasing the amount of loans they are giving. As the politics surrounding support for women-owned and minority businesses shift, small business owners need to explore new and more effective ways to access capital.

Message me if you would like to learn more about CDFIs and how they can help you solve funding issues within your business. Our coaching and consulting services are designed to help you enhance your creditworthiness, enabling you to achieve your business growth objectives.

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